Does your homeowners insurance need to change if your house is in a trust? Usually, yes. When a living trust owns your home, the trust and its trustees generally aren't insureds under a standard homeowners policy, so the policy should be updated with a trust endorsement or by naming the trust. Tell your agent as soon as the deed is transferred.
The short version: After your attorney deeds your home to a trust, call your agent. Your homeowners and umbrella policies should name or endorse the trust and trustees. Keep yourselves as named insureds on the auto policy, and check how any vehicles moved into the trust are titled and insured.
Why the deed and the policy need to match
A standard homeowners policy covers "you," the named insured, and certain relatives who live with you. A trust is a separate owner. Industry references note that neither the trust nor the trustee is an "insured" under the standard homeowners definitions. If the trust holds title and the policy doesn't account for it, a claim could raise questions about who has coverage, especially for liability, where a lawsuit might name the trust or a trustee.
The fix is usually simple. ISO's Trust Endorsement (HO 06 15, which replaced the older HO 05 43) adds the trust and its trustees as insureds for the home and for liability arising from it, and asks you to tell the company if the grantor moves out. Many carriers use their own version, and some simply add the trust as an additional named insured. What matters is that your policy addresses it.
Don't forget the umbrella
Umbrella policies define who is insured too, and they generally don't automatically cover a trust or trustee. If the trust owns your home, your umbrella should be endorsed the same way, so the trust has the same protection above your home policy that you do. See Michigan umbrella insurance.
Auto insurance: keep the people named
Michigan PIP, which pays medical bills and lost wages after a car crash, applies to "the person named in the policy," that person's spouse and resident relatives (MCL 500.3114). In one published case, a Michigan court held that a policy naming a business provided no PIP to the business's owner personally. No Michigan case we've found applies that to a trust, but the safe practice is the same: make sure the individuals in your household are named insureds on your auto policy, whoever holds the title. If your attorney recommends moving vehicles into the trust, call us first so we can confirm the policy is set up correctly.
Michigan property tax: usually not a problem
Many homeowners worry that moving the house into a trust will raise their property taxes. In Michigan, a transfer to a trust is generally not a transfer of ownership for taxable value purposes when the settlor or the settlor's spouse (or both) is the sole present beneficiary (MCL 211.27a). Confirm your situation with your estate attorney.
What to send your agent
- The exact name of the trust and the date it was created
- The names of the current trustees and successor trustees
- The recorded deed, or confirmation of which properties the trust now owns
- Any vehicles, boats or other property the trust now owns
Do the same for a cottage or rental property held in a trust or an LLC. Ownership in an entity has its own coverage questions. For broader planning, see high-net-worth insurance beyond the house.
Frequently Asked Questions
Do I need to tell my insurance company my house is in a trust?
Yes. A trust is a separate owner, and a standard homeowners policy generally doesn't treat the trust or its trustees as insureds. Your agent can add a trust endorsement or name the trust so the policy matches the deed.
What is a trust endorsement on homeowners insurance?
An endorsement that adds the trust and its trustees as insureds under your homeowners policy for the home and related liability, with notice required if the grantor moves out. ISO's version is HO 06 15, and many carriers use their own.
Does my umbrella policy cover my trust?
Not automatically. Umbrella policies generally don't include a trust or trustee as an insured. If a trust owns your home, ask your agent to endorse the umbrella as well.
Does putting my house in a trust raise my property taxes in Michigan?
Generally not when the settlor or the settlor's spouse is the sole present beneficiary. Michigan doesn't treat that transfer as a transfer of ownership. Confirm with your estate attorney.
Should my car be owned by my trust?
Ask your attorney and your agent first. Michigan PIP follows the person named in the policy and their household. Whoever holds the title, make sure the people in your household are named insureds on the auto policy.
The bottom line
Estate planning protects what you've built. A ten-minute call makes sure your insurance protects the trust that now owns it.
J. Jacobs & Associates is an independent agency in Lake Orion that has helped Michigan families since 1981. We represent more than twenty carriers, including companies built for higher-value homes and estates, and we coordinate home, auto and umbrella coverage so the owners and the insureds match. Call (248) 693-6455 or visit our high-net-worth insurance page.